Ethanol Groups Continue to Call for More on RFS Exemptions

Source: By Todd Neeley, DTN/Progressive Farmer • Posted: Friday, September 21, 2018

OMAHA (DTN) — EPA on Thursday released aggregated annual data on small-refinery exemptions to the Renewable Fuel Standard, as well as waiver requests for current and future years.

Earlier this year, EPA Acting Administrator Andrew Wheeler told members of Congress the agency would be posting the data to EPA’s website in a “dashboard” form. On Thursday, the agency provided the latest data online.

The agency announced in the latest RFS volumes proposal that it granted 49 waivers in 2016 and 2017, totaling 2.25 billion gallons of biofuels, which equates to affecting roughly 800 million bushels of corn demand. The National Biodiesel Board estimates the loss of 300 million gallons of biodiesel blended, due to waivers.

“For the first time, EPA is providing new information to the public on small-refinery exemptions and RIN (renewable identification numbers) trading,” Wheeler said in a statement. “Increasing transparency will improve implementation of the RFS and provide stakeholders and the regulated community the certainty and clarity they need to make important business and compliance decisions.”

U.S. Secretary of Agriculture Sonny Perdue said he’s hopeful the action will help biofuels and agriculture markets.

“In our corn-growing community, the RFS program is one of the top issues people are talking about,” he said in a statement. “We hear concerns about lack of transparency around the issuance of small-refinery waivers and we are hopeful these changes will put everyone on a level playing field to receive the information at the same time. Farmers stay on top of every bit of news that comes out about the RFS and their industry, so providing them with more information is a priority. Adding timely updates to EPA’s website will be important to USDA’s customers, the people of American agriculture.”

In addition, the EPA will be posting information on RIN markets. That includes the weekly average price and volumes of RINs traded.

Growth Energy CEO Emily Skor said in a statement to DTN her group still has a lot of questions about how the EPA will resolve the issue.

“The dashboard is a positive step in the right direction towards greater transparency on the excessive granting of small-refinery exemptions, but many important questions remain,” she said. “Who has received these waivers? What is the criteria for the waiver? Are the lost gallons from the waivers going to be reallocated as the law requires? In order to gain back the confidence of American businesses, EPA must provide more answers.”

Renewable Fuels Association CEO and President Bob Dinneen said that even though EPA posted the information, questions still remain.

“Today’s action may prevent small refiners from obtaining market-moving information before other participants in the marketplace,” he said. “That’s important because it appears the RIN (renewable identification number) market was gamed earlier this year by a small group of refiners who were privy to sensitive information regarding compliance exemptions before the rest of the market knew what was going on. Hopefully, this will put a stop to that.”

Dinneen said market participants and the public “deserve to know exactly who is receiving small-refinery exemptions and what criteria is being used by EPA in making the decision to grant or deny a waiver request.”

USDA has sided with ethanol and agriculture groups on a request to reallocate gallons lost to waivers.

Last week, University of Illinois economist Scott Irwin released a study that found waivers have had a minimal effect on ethanol demand so far, but cautioned those waivers hurt the future of higher ethanol blends.

During the latest public comment period on the RFS, EPA made it clear it is not considering public comments on waivers. But a USDA memorandum sent to EPA on Aug. 15 disputes the EPA’s claim the waivers are beyond the scope of the latest RFS volumes proposal.

What’s more, USDA’s Office of the Chief Economist raised concerns about the EPA electing not to account for small-refinery waivers in the latest RFS blend volumes proposal for 2019.

Publicly, EPA has touted the latest RFS proposed blending volumes for 2019 as proof the agency continues to promote the expansion of biofuels production, all while detailing the number of gallons waived. In addition, the EPA stated in its proposal that there are zero requested waivers for 2019 volumes.

The public-comment period for the 2019 blend volumes ended on Aug. 17. EPA’s proposed blend volumes do not factor in the biofuels gallons waived in 2016 and 2017. Many commenters suggested EPA could come up with an estimate of potential small-refinery exemptions based on the waiver volumes granted for 2016-17. Instead, EPA factored in zero waiver volumes for 2019.

In a memo to the EPA, USDA’s Office of Chief Economist said EPA should factor in an estimate of waived gallons in 2019 when finalizing the blend volumes for 2019.

Find the dashboard here:…